How A Sweeping "New York Only" Trade Caused A 19,600 Share Flash Smash In IBM, And Sent The DJIA Surging
Courtesy of today's flash smash in IBM stock, which briefly sent IBM stock surging by 3% on what appears to have been a rogue trade, but may have been more, we now have some further clues into the massive market lifting buy orders that appear out of leftfield at strategic times, typically just before Sputnik moments. Bloomberg explains the melt up in the stock, that coincided with the inexplicable 80 point DJIA rally on no news, that moved the market from its lows, to green (in ES) for the day. "IBM, which makes up 10 percent of the share-price weighted Dow average, jumped to $164.35 on an order for 200 shares on the New York Stock Exchange at 3:18:15 p.m. New York time, according to data compiled by Bloomberg. The stock traded at $160.89 during the same second, followed by five trades for a combined volume of 19,600 shares at between $163.22 and $164.35, or as much as 2.2 percent higher. IBM retreated to $160.78 following those trades." But by then it was too late: the buying spree, of which IBM had been part of, had offset a momentum algo that for some inexplicable required a stunning 500 ES contracts per second for the last 15 minutes of trading - a truly whopping number, and indicative of someone with virtually unlimited pockets doing the buying. Furthermore as the chart below shows, the IBM trade happened just as the buying program went berserk and sent the TICK to the day's high at 1352.
Here's what really happened: a "lift all" algo went nutes at precisely 15:18:15
And once again, it is the NYSE and those damn LRPs that are to blame:
“It looks like a rogue print,” Shea said. “My guess is
that this is an electronic order that was sent to the floor in
New York, tagged ‘New York only’ erroneously, restricting it
from being sent to other exchanges and thereby sweeping the book
in New York.”
Sure enough, our good old friends from the NYSE, who still owe us that DMM participant schedule, had nothing to say:
NYSE spokesman Ray Pellecchia and IBM spokesman Mike Fay
declined to comment when contacted by phone.
We'll provide you what they would say in the absence of a conflict: the complete lack of liquidity almost caused today's 3pm Fed-Citadel ramp up to crash and burn. Almost. Next time it just may...
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